ACC 4100 Lecture 33: 21
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The Art League is a not-for-profit organization dedicated topromoting the arts within the community. There are two programsconducted by the Art League: (1) exhibition and sales of membersâart (referred to as Exhibition) and (2) Community Art Education.Activities of the Art League are conducted by a part-timeadministrator, a part-time secretary-bookkeeper, and severalpart-time volunteers. The volunteers greet visitors, monitor thesecurity of the exhibit hall, and handle the sales of art to thepublic. Art on exhibit is considered the property of the memberartists, not the Art League.
The post-closing trial balance for the Art League as of June 30,2016, is shown here.
ART LEAGUE
Post-closing Trial Balance
June 30, 2016
Debits
Cash $ 2,315=====debit
Short-term Investments 14,111=====debit
Grants Receivable 6,600=======debit
Prepaid Expense 1,360======debit
Equipment 10,345======debit
Cr.=====Allowance for DepreciationâEquipment $ 2,626
Long-term InvestmentsâPermanently Restricted5,967-=====Debit
Cr.=====Accounts Payable and Accrued Expenses 2,849
Cr =====Deferred Revenue 4,800
Cr.====Unrestricted Net Assets 9,211
Cr.====Temporarily Restricted Net Assets 15,245
Cr.=====Permanently Restricted Net Assets 5,967
Totals $ 40,698 $ 40,698
Following is information summarizing the transactions of the ArtLeague for the year ended June 30, 2017.
1. During the year, unrestricted cash was received from thefollowing sources: grants, $13,600, of which $5,600 had beenreported as receivable on June 30, 2016; annual contributions fromfund drives and other unrestricted gifts, $14,061; membership dues,$17,285; tuition and fees for educational workshops, $7,174; andsales of membersâ art, $12,210, of which 20 percent representscommissions earned by the Art League.
2. Interest earnings were as follows: interest on unrestrictedinvestments totaled $706; interest on temporarily restrictedinvestments totaled $945; interest on permanently restrictedinvestments totaled $364 (these investment earnings are temporarilyrestricted for program use).
3. Grants receivable as of year-end totaled $5,420, of which$3,320 was earned in the current year (thus unrestricted) and$2,100 was reported as deferred revenue.
4. The Art League receives free rent from the city at anestimated value of $20,000 a year.
6. During the year, $3,900 of short-term investments were sold,with the proceeds used to purchase two computers and printer at acost of $3,035. The resources used were temporarily restricted forthe purchase of equipment.
7. In accordance with the terms of the Art League endowment,income earned by the endowment for the provision of free artinstruction for handicapped children was provided at a cost of$1,025. This amount was allocated to community art education.
8. Depreciation on equipment in the amount of $1,842 wasrecorded.
9. Expenses for the year were allocated 30 percent to ExhibitionProgram, 30 percent to Community Art Education, 25 percent toManagement and General Expenses, and 15 percent toFund-Raising.
10. Proceeds of art sales, net of commissions charged by the ArtLeague, totaled $9,768. This amount was paid to member artistsduring the year.
11. All nominal accounts were closed at year-end.
Prepare journal entries to record these transactions. Expensetransactions should be initially recorded by object classification,unless otherwise instructed; in entry 9, expenses will be allocatedto functions. (If no entry is required for atransaction/event, select "No Journal Entry Required" in the firstaccount field. Do not round intermediate calculations. Round youranswers to the nearest whole dollar amount.) |
12. For the purpose of government-wide financial statements, thecost of cleaning up a government-owned landfill and closing thelandfill
A) Is not recognized until the costs are actually incurred
B) Is accrued and amortized over the expected useful life of thelandfill
C) Is accrued on a pro-rated basis each period based on how fullthe landfill is
D) Is accrued in full at the time the costs become estimable
E) Is treated as an encumbrance at the time it become estimable andas an expenditure when it is actually paid
13. Drye Township has received adonation of a rare painting worth $1,000,000. For Drye'sgovernment-wide financial statements, three criteria must be metbefore Drye can opt not to recognize the painting as an asset.Which of the following is not one of the three criteria?(1.) Thepainting is held for public exhibition, education, or research infurtherance of public service, rather than financial gain.(2.) Thepainting is scheduled to be sold immediately at auction.(3.) Thepainting is protected, kept unencumbered, cared for, andpreserved.
A) Item 1 is not one of the three criteria
B) Item 2 is not one of the three criteria
C) Item 3 is not one of the three criteria
D) All three items are required criteria
E) None of the three items are required criteria
14. Which of the following is nota criterion of a capital lease?
A) The lease transfers ownership of the property to the lesseeby the end of the lease term
B) The present value of the minimum lease payments equals orexceeds 90 percent of the fair value of the leased property, net oflessor's investment tax credit
C) The lease contains an option to purchase the leased property ata bargain price
D) The lease contains an option to renew
E) The lease term is equal to or greater than 75 percent of theestimated economic life of the leased property
15. Which statement is falseregarding the government-wide Statement of Net Assets?
A) The purpose of the Statement of Net Assets is to report theeconomic resources of the government as a whole
B) Assets are reported excluding capital assets
C) Capital assets are reported net of depreciation
D) Investments are reported at fair value rather than historicalcost
E) Business-type activities include Enterprise Funds
16. Which statement is falseregarding the Balance Sheet for Fund-Based Statements?
A) The Balance Sheet for Fund-Based Statements measures onlycurrent financial resources of the governmental entity
B) The Balance Sheet for Fund-Based Statements uses the modifiedaccrual method for timing purposes
C) Capital assets are not reported on the Balance Sheet forFund-Based Statements
D) The Balance Sheet for Fund-Based Statements measures onlylong-term financial resources of the governmental entity
E) Long-term debts are not reported on the Balance Sheet forFund-Based Statements
17. The city operates a publicpool where each person is assessed a $2 entrance fee. Which fund ismost appropriate to record these revenues?
A) General Fund
B) Enterprise Fund
C) Special Revenue Fund
D) Internal Service Fund
E) Capital Projects Fund
18. Which of the following typesof health care organizations follow FASB Accounting StandardsCodification for GAAP?
Investor-Owned Health Care Enterprises | Not-for-Profit Organizations | Governmental Health Care Organizations | |
A) | Yes | Yes | No |
B) | Yes | Yes | Yes |
C) | No | No | Yes |
D) | Yes | No | Yes |
E) | Yes | No | No |
A) Entry A
B) Entry B
C) Entry C
D) Entry D
E) Entry E
19. In accruing patient chargesfor the current month, which one of the following accounts should ahospital credit?
A) Accounts Payable
B) Deferred Revenue
C) Unearned Revenue
D) Patient Service Revenues
E) Accounts Receivable
20. Which account would becredited in recording a gift of medicine to a nursing home from anoutside party?
A) Nonoperating Gain - Contributions
B) Contractual Adjustments
C) Patient Service Revenues
D) Drugs and Medicines
E) Nonoperating Revenues - Contribution
21. Unconditional transfers ofcash or other resources to an entity in a voluntary nonreciprocaltransaction is the GAAP definition for
A) miscellaneous revenues
B) contributions
C) unconditional promises to give
D) exchange transactions
E) pledges
22. On a statement of functionalexpenses for a voluntary health and welfare organization, how areexpenses classified?
A) Health services expenses and operating expenses
B) Program services expenses and administrative servicesexpenses
C) Program services expenses and supporting services expenses
D) Operating expenses and supporting services expenses
E) Operating expenses and administrative expenses